By: Ted Citrome and Melissa Tayar
The Ontario government announced a new proposal to impose a 15 percent tax on purchases of residential real estate by foreign buyers as part of its Fair Housing Plan. Similar to the foreign buyer tax enacted last year by the British Columbia government, the Non-Resident Speculation Tax (NRST) is intended to cool the housing market in Ontario.
Key features of the NRST proposal include:
- The amount of NRST is 15% of the value of the consideration for the land.
- The NRST only applies to land in the “Greater Golden Horseshoe” area.
- The NRST is levied when one of the following persons acquires legal or beneficial ownership of land:
(a) an individual other than a Canadian citizen or permanent resident;
(b) a corporation incorporated outside Canada;
(c) a corporation incorporated in Canada that is controlled by a foreign national or a foreign corporation.
Rebates may be available to foreign nationals who subsequently become Canadian citizens or permanent residents, or who are full-time Ontario students.
- The NRST applies only to a transfer of residential land; purchases of agricultural land, commercial land and industrial land are exempt. Residential land includes condo units and real estate containing up to six family residences.
- Transfers registered after the announcement date of April 20, 2017 are subject to the NRST, unless the conveyance occurs pursuant to a binding agreement entered into on or before that date.
- The proposal also permits “Toronto and potentially other interested municipalities” to introduce an additional tax on vacant homes.
- Additional details regarding the NRST will become available when draft legislation and administrative guidelines are released.
The impact of these proposed measures on foreign investors in Ontario real estate could be significant. Dickinson Wright lawyers are available to respond to inquiries regarding NRST and the Fair Housing Plan. For more information please contact Ted Citrome at (416) 649-4609 or Melissa Tayar at (416) 777-4012 in the Toronto, Canada office.